April 1, 1999 was no April Fool’s joke for Mark Cuban. On that day, he sold his company, broadcast.com, to Yahoo for $5.7 billion and became a billionaire. The deal doesn’t make a lot of sense today, but at the time, it was possible to see what Yahoo was thinking. Meanwhile, Mark Cuban did fine for himself, buying sports teams and starring on TV’s Shark Tank.
What Broadcast.com was
Broadcast.com was a service to stream radio stations over the Internet, allowing you to listen to sports broadcasts when you had poor radio reception or were out of market. It was a way for radio stations to extend their reach.
When I was a kid, my dad had told me how you could pick up distance a.m. radio signals at night. It was cool being able to pick up broadcasts from Chicago and Pittsburgh near St. Louis. But what broadcast you received from those distant cities was a matter of luck. It didn’t mean I could listen to a baseball game, for example. I could pick up WLS out of Chicago because I didn’t have a local station interfering with it. The same wasn’t true for WGN, the radio station that broadcast Cubs games.
That’s what was so cool about broadcast.com. you could listen to whatever market you wanted, even in broad daylight. And I did. I would pull up the gamecast on ESPN, pull up the radio broadcast on broadcast.com, and it was almost as good as watching the game on TV. The combination of the two was much better than radio alone.
In July 1998, Broadcast.com held an initial public offering, jumping 250% in value on its first day and setting a record. It reached $1 billion in market capitalization. Mark Cuban held 30 percent of the company, making him immediately worth $300 million. It had 570,000 users, but profits were elusive, both when it was independent and when Yahoo owned it. Yahoo shut it down in 2002. It’s one of the worst acquisitions of the dot-com era.
What Yahoo was thinking when it bought Broadcast.com
Today, Yahoo is the place you go to get a throwaway email account you can give to someone you don’t want to give your real email account too for whatever reason. When you see that email domain, you either assume it’s a burner account, the person has had the account for 25 years, or maybe both. My 25-year-old Yahoo account is effectively a burner account.
But in 1999, Yahoo was the busiest site on the Web. It’s not exactly fair to say Yahoo was Google before Google, but it was the closest thing we had to Google in terms of popularity at the time.
Yahoo made various acquisitions over the years to help preserve its status as a destination. Geocities was one of those acquisitions. Broadcast.com was another.
The trouble was that even though the services were popular, there wasn’t necessarily a good way to monetize them to make them profitable. Yahoo itself found a way to be profitable eventually, but not all of the expensive acquisitions it made along the way survived the journey. Broadcast.com was an example of that, shutting down after just three years even though it was Yahoo’s most expensive acquisition. Yahoo itself is no longer an independent company and is now part of a Verizon subsidiary called Oath, a place where web properties that are past their prime go to not necessarily die, but they don’t seem to thrive there either.
Mark Cuban: From dotcom to Shark Tank
Mark Cuban sold Broadcast.com at exactly the right time, and he isn’t shy about saying it, a contrast to what his Shark Tank co-star Kevin O’Leary says about his wealth. Cuban sold most of his Yahoo stock soon after the buyout, netting $1 billion. He timed that pretty well, considering Verizon paid around $4.5 billion for all of Yahoo in 2017.
He invested his money well afterward, so his net worth was $5.7 billion as of 2024. Ironically that’s very close to the purchase price of his startup.
David Farquhar is a computer security professional, entrepreneur, and author. He has written professionally about computers since 1991, so he was writing about retro computers when they were still new. He has been working in IT professionally since 1994 and has specialized in vulnerability management since 2013. He holds Security+ and CISSP certifications. Today he blogs five times a week, mostly about retro computers and retro gaming covering the time period from 1975 to 2000.
To this day, I am shocked at how much Yahoo threw money out the window, and today it is just a vague memory.
Google did the right thing, it started slowly and solidly, held its own during the dot com bubble, and waited for the market to recover before making its IPO.
I agree. I’ve been putting off writing an analysis of Yahoo but one of these days I have to do it. Yahoo was playing a short game and Google was playing a long game.